August 14, 2013

Apple Stock Climbs Following Tweets From Billionaire Investor

Apple’s stock climbed five percent on Tuesday to close at a seven month high following a pair of Tweets from billionaire activist investor Carl Icahn. Icahn said he believes the stock is undervalued and could be worth as much as $700 a share if CEO Tim Cook pushed the board of directors for a larger buyback. Shares of Apple closed at $489 for the day.

In June the company announced their plans to boost their dividends and buy back shares to $100 billion, a plan which will run through 2015. Apple, like other tech companies, have seen their stock prices surge and plummet on the news of eager investors or rumors of trouble in their supply chain. Apple has not performed particularly well this year, leading to rumors that its board of directors may be looking to replace CEO Tim Cook.

"We currently have a large position in APPLE," Tweeted Icahn on Tuesday. "We believe the company to be extremely undervalued. Spoke to (Apple chief executive) Tim Cook today. More to come."

Not long after, Icahn offered more detail:

"Had a nice conversation with Tim Cook today. Discussed my opinion that a larger buyback should be done now. We plan to speak again shortly.”

Apple later offered a statement to the Wall Street Journal confirming the discussion between the activist investor and the CEO and, while they didn’t say anything about the possibility of increasing the buyback, they did say they appreciated the “interest and investment of all our shareholders.”

“Tim had a very positive conversation with Mr. Icahn today,” said an Apple spokesperson.

Apple topped headlines last year as their shares skyrocketed to record highs of over $700. They also outperformed Exxon Mobile to become the most valuable company in the world. Yet even as some investors claimed Apple’s stock prices were still set to climb even higher, prices began to fall late in the year. Since then, shares have dipped below $300 at times, though it’s currently on the rise ahead of new product launches.

Meanwhile, Icahn has recently been embroiled in a fight with Dell to prevent the computer maker from taking their company private and removing it from Wall Street. According to the investor, this move would undervalue the company. According to the AFP, Icahn is estimated to be worth $20 billion, making him the 26th wealthiest person in America.

Following a general decline in stock prices at the end of 2012, Apple stock reacted sharply in January following a report that the company had cut orders of their brand new iPhone 5. According to the Wall Street Journal, Apple was experiencing “weaker-than-expected sales” just following the holiday season and cut orders from their production partners. It was later suspected that this report may have been used to push Apple stock to $500 to allow investors to take advantage of call options.